Shock figures reveal pensions gap
One in four Scots has no savings for their retirement says report
New research reveals that while retirement saving in Scotland has reached the highest level ever recorded, many people remain confused about how much they need to set aside for their pension.
The Scottish Widows Retirement Report indicates that 57% of the population are now saving adequately – an average £131 a month towards their retirement, rising 10% from £119 last year.
Almost one in five (18%) expects to save more over the next 12 months and 44% feel positive about their long-term financial situation, up from 36% last year.
The average proportion of earnings being put away each month towards retirement has also risen from 9.1% last year to 10.8%, edging closer to the 12% recommended by Scottish Widows. This is almost twice the level in 2006 (5.5%).
However, despite the recent raft of reforms designed to shift retirement planning higher up the nation’s financial agenda, nearly a quarter of Scots (23%) are not saving at all for retirement. One in five (19%) Scots have no savings or investments whatsoever, a figure that has seen no improvement on last year’s results.
The study of 562 Scottish adults highlighted a clear disparity between expectations of retirement income and the reality of how far savings will stretch.
The average income Scots believe they would need to feel comfortable in retirement is £22,941. But saving at the current average level will produce an annual income of £14,800 in retirement – an annual shortfall of over £8,100.
Ian Naismith, retirement expert at Scottish Widows, said: “Since we began our research over a decade ago, a record proportion of people in Scotland are now saving adequately for the future, showing that the unprecedented changes in the pensions industry have gone some way to engage the nation with retirement saving.
“Despite the positive signs, our research shows that confusion remains around how actions today translate into money tomorrow, with many people in Scotland retaining unrealistic expectations about what their income in retirement might be.
“Both the industry and the Government need to continue working together to help people understand the living standard their savings might produce in real and tangible terms.
“Having a plan in place, starting to save earlier and putting aside more for later life will mean people will be better prepared to close the retirement aspiration gap.”